Review on Pakistan’s Balance of Payments
July 2006 - June 2007
Pakistan’s balance of payments showed a deficit of $ 6,878 million in its current account balance
during 2006-07 as against a deficit of $ 4,990 million during 2005-06. The deterioration of $ 1,888
million in current account balance as compared to last year was the combined effect of higher net
payments of $ 1,270 million and $ 915 million under goods and income accounts respectively, offset
partly through lower net payment $ 260 million under services and higher net receipts by $ 37 million
under current transfer.
The capital and financial account showed a net inflow of $ 10,449 million and increased by $ 4,378
million over net inflows of previous year resulting in an increase of $ 2,396 million in overall surplus
during the year 2006-07. On quarterly basis, the overall balance registered deficits of $ 670 million in
first quarter while surpluses of $ 595 million, $ 502 million and $ 3,303 million were observed in
second, third and fourth quarters of financial year 2006-07.
The quarterly and annual balance of payments position is summarized below: (Million US $)
2006-07(QUARTERLY)
ITEM
Jul - Sep
Oct - Dec
Jan- Mar
Current Account Balance
-2,722
-1,912
Trade balance (Goods)
-2,742
-2,566
Exports f.o.b.
4,191
Imports f.o.b.
Services (net)
Income (net)
Current transfers (net)
ANNUAL
Apr - Jun
2006-07
2005-06
-1,534
-710
-6,878
-4,990
-2,312
-2,091
-9,711
-8,441
4,202
4,142
4,743
17,278
16,553
-6,933
-6,768
-6,454
-6,834
-26,989
-24,994
-1,393
-1,066
-1,014
-697
-4,170
-4,430
-840
-971
-804
-967
-3,582
-2,667
2,253
2,691
2,596
3,045
10,585
10,548
General govt.
59
128
54
284
525
681
Other sectors
2,194
2,563
2,542
2,761
10,060
9,867
87
88
71
58
304
241
1,597
2,366
2,416
3,766
10,145
5,830
368
53
-451
189
159
253
-670
595
502
3,303
3,730
1,334
-1,334
Capital account (net)
Financial account
Errors and Omissions (net)
Overall balance
Reserves and related items
670
-595
-502
-3,303
-3,730
Reserves assets
680
-652
-492
-3,246
-3,710
-1,136
Use of Fund Credits & Loans
-10
-43
-10
-57
-120
-143
0
100
0
0
100
-55
Exceptional financing
IX
Merchandise Trade
During 2006-07 exports and imports of goods (general merchandise plus repairs of goods and goods
procured in ports by carriers) were $ 17,278 million and $ 26,989 million while the same in 2005-06
were $ 16,553 million and $ 24,994 million respectively.
During current financial year, the trade deficit widened by $ 1,270 million to reach $ 9,711 million
compared to $ 8,441 million during the preceding financial year. Both exports and imports went up
during 2006-07 over 2005-06; imports, however, at a higher rate than exports. The ratio of exports to
imports fell from 66.2 (2005-06) to 64.0 (2006-07). A widening trade deficit was due to increase in
imports by $ 1,995 million or 8.0 percent, offset partly by increase of $ 725 million or 4.4 percent in
exports.
The quarterly and annual positions of exports and imports by source are as follows: (Million US $)
2006-07 (QUARTERLY)
ITEM
ANNUAL
Jul – Sep
-2,742
Oct -Dec
-2,566
Jan –Mar
-2,312
Apr -Jun
-2,091
2006-07
-9,711
2005-06
-8,441
4,191
4,202
4,142
4,743
17,278
16,553
4,153
3,840
4,162
3,768
4,102
3,925
4,702
4,302
17,119
15,835
16,388
14,817
3,977
3,900
4,039
4,393
16,310
15,311
-137
-132
-114
-91
-475
-494
(b) Timing adjustment
-36
175
22
109
270
363
(c) Coverage adjustment
II. Repairs of goods
349
0
219
0
156
0
291
0
1,015
0
1,208
1
38
6,933
40
6,768
40
6,454
41
6,834
159
26,989
164
24,994
6,824
6,558
6,681
6,260
6,359
5,983
6,751
6,358
26,615
25,159
24,624
22,997
49
27
23
85
183
337
157
147
219
224
747
814
60
247
134
85
526
476
11. Repairs of goods
27
26
33
29
115
101
111.Goods procured in ports by
carriers
82
61
62
54
259
269
Trade Balance
Exports (I+II+III)
I. General merchandise exports
(f.o.b.)
(a) Exchange record
i) F.o.b. & c.f. basis
ii) Freight adjustment
III.Goods procured in ports by
carriers
Imports (I+II+III)
1.General merchandise imports
(f.o.b.)
(a) Exchange record
(b) Personal baggage, NRI &
duty free shops
(c) Foreign economic assistance
(d) Others
X
The general merchandise transactions reported through banks (export receipts) on a mixed f.o.b and
c&f basis amounted to $ 16,310 million as compared to $ 15,311 million a year earlier. The General
merchandise export at a uniform f.o.b are arrived at by deducting the element of freight amounting to $
475 million, adding adjustments of timing (outstanding export bills) of $ 270 million and other exports
of $ 1,015 million not covered through banking channel in 2006-07.
Major commodities groups constituting 88 percent of total export receipts during FY07 in descending
order except others group are shown below along with export receipts during FY06: -
Commodity
Cotton, clothing & textile group:
Cotton
Articles of Apparel & Clothing Accessories
Knit/Cr
Other Made-up Textile Articles; Sets, Worn
Clothing
Articles of Apparel/Clothing Acces not
Knited /Cro
Cereals
Mineral Fuels, Oils and Their Distillation
Product
Special Woven Fabrics, Tufted Textiles
Fabrics, Lace
Toys, Games and Sports Requisites; Parts &
Acces.
Leather & manufactures of leather group:
Raw Hides, Skins and Leather other than Fur
skins
Articles of Leather, Travel Goods and
Handbags etc
Man-Made Staple Fibers
Carpets and other Textile Floor Coverings
Optical, Photographic, Measuring and Medical
Inst.
Man-Made Filaments
Fish and Crustaceans
Salt, Sulfur, Earth's and Stones, Lime and Stone
Plastics and Articles thereof
Silk
Electrical Machinery & Equipment and Parts
thereof
Edible Fruits and Nuts
All Others
Grand Total
2006-07 (Quarterly)
Jul – Sep Oct -Dec Jan –Mar Apr -Jun
(Million US $)
Annual
2006-07
2005-06
864
853
823
860
3,401
3,197
586
527
481
527
2,121
1,954
473
491
507
514
1,986
1,848
271
249
255
247
266
344
290
360
1,081
1,199
929
1,039
211
193
221
263
888
779
131
127
131
142
531
526
93
79
77
106
356
418
129
118
115
144
505
472
97
46
61
98
82
68
91
89
63
97
96
67
383
313
260
547
196
271
54
49
37
39
42
34
57
49
44
25
38
42
53
57
39
46
41
24
66
52
45
50
38
49
230
207
164
161
159
149
216
209
163
123
237
80
36
35
439
3,977
47
27
436
3,900
26
54
489
4,039
36
26
565
4,393
145
141
1930
16,310
135
137
1835
15,311
XI
The commodity-wise analysis of export receipts revealed that cotton, clothing & textile group fetched
the highest foreign exchange of $ 8,589 million or 52.7 percent of total export receipts during the
current year. Cereals group was the second largest foreign exchange earner with 7.4 percent share at
$1,199 million.
Country-wise pattern of export receipts showed that during FY07, USA was the prominent buyer of
Pakistani merchandise contributing to an amount of $ 3,844 million. The second highest buyer was
UAE that imported goods worth $ 1,263 million from Pakistan.
The country-wise comparison of export receipts during 2006-07 along with 2005-06 is exhibited in the
figure given below: -
The General merchandise (imports) recorded a rise of $ 1,991 million or 8.1 percent over the previous
year. Of the total imports payments, $ 25,159 million or 94.5 percent were reported by banks while
those under foreign economic assistance, personal baggage & NRI, sale of duty free shops and others
taken together amounted to $ 1,456 million or 5.5 percent.
XII
Principal commodities groups constituting 88 percent of total import payments reported by banks
during 2006-07 in descending order except other groups are shown below along with import payments
during 2005-06: -
(Million US $)
Commodity
Mineral Fuels, Oils and Their
Distillation Product
Nuclear Reactors, Boilers,
Machinery and Appliance
Electrical Machinery & Equipment
and Parts thereof
Organic Chemicals
Vehicles other than Railway
/Tramway Rolling Stock
Iron and Steel
Special Classification Provisions
Plastics and Articles thereof
Animal or Vegetable Fats, Oils &
Cleavage Products
Cotton
Fertilizers
Oil Seeds and Oleaginous Fruit
Sugars and Sugar Confectionery
Optical, Photographic, Measuring
and Medical Inst.
Paper and Paperboard, Articles of
Paper Pulp
Miscellaneous Chemical Products
Articles of Iron or Steel
Edible Vegetables
Rubbers and Articles thereof
Organic or Inorganic Compounds of
Precious Metals
All Others
Grand Total
2006-07 (Quarterly)
Jul – Sep Oct -Dec Jan –Mar Oct -Dec
Annual
2006-07
2005-06
2,217
1,783
1,682
2,008
7,691
6,209
618
691
752
703
2,763
2,705
553
324
516
381
514
342
495
343
2078
1,390
1844
1,353
314
262
300
237
320
270
253
258
290
287
167
264
255
315
354
276
1,180
1,134
1,074
1,035
1,206
1,387
826
920
214
123
118
41
282
251
120
134
153
58
204
236
26
105
9
279
201
131
91
16
948
680
409
390
366
787
483
642
286
692
97
92
92
85
365
304
74
73
74
77
75
69
85
115
75
68
107
75
66
81
64
85
90
47
45
70
334
323
302
277
276
276
327
254
191
281
62
772
6,906
64
748
6,505
69
784
6,215
54
794
6,738
250
3,099
26,364
224
2,995
24,193
XIII
The country-wise comparison of import payments including freight during 2006-07 along with 200506 is exhibited in the figure given below:-
XIV
Services
The deficit in services account decreased by $ 260 million from $ 4,430 million in 2005-06 to $ 4,170
million in 2006-07. The aggregate receipts of services transactions during 2006-07 increased by $ 371
million or 9.8 percent to $ 4,140 million from $ 3,769 million during 2005-06 and aggregate payments
went up by $ 111 million or 1.4 percent to $ 8,310 million from $ 8,199 million during 2005-06. The
higher receipts were recorded under government services, transportation services and other business
services. The rise in outflows of services account was due to transportation, other business and travel
services.
The item-wise receipts and payments in services account are as follows:
(Million US $)
2006-07
ITEM
Credit
Services
1. Transportation
Debit
2005-06
Net
Credit
Debit
Net
4,140
8,310
-4,170
3,769
8,199
-4,430
1,102
3,177
-2,075
1,080
2,863
-1,783
1.1 Passenger
646
521
125
656
453
203
1.2 Freight
127
2,224
-2,097
124
2,083
-1,959
1 .3 Other
329
432
-103
300
327
-27
277
1,625
-1,348
216
1,411
-1,195
2.1 Business
15
62
-47
8
57
-49
2.2 Personal
262
1,563
-1,301
208
1,354
-1,146
123
98
25
198
101
97
2. Travel
3. Communications services
4. Construction services
74
60
14
16
143
-127
5. Insurance services
30
126
-96
29
131
-102
6. Financial services
74
135
-61
70
133
-63
104
90
14
72
44
28
41
115
-74
33
99
-66
459
2,557
-2,098
391
2,953
-2,562
2
0
2
1
6
-5
1,854
327
1,527
1,663
315
1,348
7. Computer and information services
8. Royalties and license fees
9. Other business services
10. Personal, cultural, and recreational services
11. Government services.
XV
Income
The income deficit of $ 2,667 million in 2005-06 increased by $ 915 million during 2006-07 to $ 3,582
million. The net outflows of direct investment income rose to $ 2,809 million during 2006-07 as
compared with $ 2,076 million during 2005-06. Also net outflows of portfolio investment income and
other investment income increased by $ 166 million & $ 17 million respectively during 2006-07 over
2005-06.
The details of receipts and payments under “Income” are as under:
(Million US $)
2006-07
ITEM
Credit
Income
Debit
2005-06
Net
Credit
Debit
Net
940
4,522
-3,582
784
3,451
-2,667
7
1
6
6
1
5
933
4,521
-3,588
778
3,450
-2,672
2.1 Direct investment
30
2,839
-2,809
39
2,115
-2,076
2.1.1 Income on equity
2.1.2 Income on debt
(interest)
2.2 Portfolio investment
2.2.1 Income on equity
(dividends)
2.2.2 Income on debt
(interest)
2.3 Other investment
30
2,839
-2,809
39
2,115
-2,076
0
0
0
0
0
0
348
607
-259
357
450
-93
6
266
-260
2
88
-86
342
341
1
355
362
-7
555
1,075
-520
382
885
-503
2.3.1. IMF charges
2.3.2. Interest on
External debt
2.3.2.1 Civil
0
23
-23
0
16
-16
0
674
-674
0
626
-626
0
666
-666
0
618
-618
2.3.2.2. Military
2.3.3. Commercial
( Medium & short)
2.3.4. IDB (Medium &
short-term)
2.3.5. Interest on
private sector debt
2.3.6.Other investment
income
0
8
-8
0
8
-8
0
11
-11
0
8
-8
0
10
-10
0
14
-14
0
154
-154
0
85
-85
555
203
352
382
136
246
1. Compensation of employees
2. Investment income
XVI
Current Transfers
The net inflows of current transfers amounted to $10,585 million during 2006-07 as compared with $
10,548 million in the previous year showing an increase of $ 37 million. The net decrease in general
government transfers was $ 156 million during 2006-07, where the net inflows were $ 525 million in
current year as compared to $ 681 million in 2005-06. This decrease is mainly due to decline in cash
grants of $ 180 million for budgetary supports as compared to last fiscal year. The net transfers in
other sectors increased by $ 193 million due to higher receipts under workers’ remittances of $ 894
million.
The details of receipts and payments under “Current Transfers” are as follows: -
(Million US $)
2006-07 (Quarterly)
ITEM
Current transfers ( net )
Current transfers receipts
General government
Saudi oil facility
Cash grants for budgetary support
Others
Other sectors
Workers remittances
Residents FCAs
Others
Current transfers payments
General government
Other sectors
Jul - Sep
Oct - Dec
Jan- Mar
Annual
Apr - Jun
2006-07
2005-06
2,253
2,691
2,596
3,045
10,585
10,548
2,268
2,706
2,614
3,070
10,658
10,655
61
0
0
61
129
0
29
100
63
0
40
23
295
0
215
80
548
0
284
264
715
0
464
251
2,207
2,577
2,551
2,775
10,110
9,940
1,233
-50
1,024
1,335
74
1,168
1,369
41
1,141
1,557
131
1,087
5,494
196
4,420
4,600
312
5,028
15
15
18
25
73
107
2
1
9
11
23
34
13
14
9
14
50
73
XVII
Capital & Financial Account
The net inflow in capital & financial account during 2006-07 stood at $ 10,449 million as against $
6,071 million during the previous year. The net capital inflow amounted to $ 304 million in current
period as against net inflow of $ 241 million in 2005-06. The project grant increased by $ 75 million in
2006-07 compared to previous year. The net inflow in financial account during 2006-07 stood at $
10,145 million as against a net inflow of $ 5,830 million in the previous year.
The quarterly and annual position of the capital & financial account is given below -
(Million US $)
2006-07 (Quarterly)
ITEM
Capital and Financial Account (net)
Capital Account (net)
Of which
-Debt Forgiveness
-Project Grant
Financial Account (net)
1- Direct Investment
2-Portfolio Investment
3-Other Investment
Jul - Sep
Oct - Dec
Annual
Jan- Mar
Apr - Jun
2006-07
2005-06
1,684
2,454
2,487
3,824
10,449
6,071
87
88
71
58
304
241
0
0
0
0
0
0
82
64
64
47
257
182
1,597
2,366
2,416
3,766
10,145
5,830
974
849
1,955
1,248
5,026
3,450
88
1207
392
1596
3,283
986
535
310
69
922
1,836
1,394
XVIII
The inflow of foreign loans/credits including short-term loans stood at $ 3,530 million as compared
with $ 2,789 million in the previous year. Of the total disbursement of long-term loans of $ 3,305
million, $ 921 million were received for financing of different projects while $ 1,523 million were
non-projects loans. An amount of $ 225 million was received from Islamic Development Bank (IDB)
for import of crude petroleum during the year as against $ 169 million in the previous year. The
repayment of long-term loans/credits stood at $ 1,433 million during the current year as against $
1,379 million in the previous year. The repayment of short-term loans/credits stood at $ 308 million
during current year as against $ 387 million during the previous year.
The annual position of utilization and repayment of foreign loans/credits is given below: -
ITEM
1.Utilization of foreign loans / credits
I) Long-term
Official
a) Project loans
b) Non-project loans
i) Food
ii) Non-food
Private un-guaranteed
II) Short-term
Official
Private un-guaranteed
2. Repayment of foreign loans /credits
I) Long-term
Official
Civil
Military
Private un-guaranteed
II) Short-term
Official
Private un-guaranteed
XIX
2006-07
(Million US $)
2005 – 06
3,530
2,789
3,305
2,620
2,444
2,069
921
696
1,523
1,373
0
0
1,523
1,373
861
551
225
169
225
169
0
0
1,741
1,766
1,433
1,379
1,031
1,059
985
999
46
60
402
320
308
387
308
387
0
0
The interest paid on public and publicly guaranteed loans amounted to $ 695 million whereas interest
on un-guaranteed private loans stood at $ 154 million. An amount of $ 23 million was paid to
International Monetary Fund (IMF) as charges.
The details of interest on external debt / liabilities are as under:--
(Million US $)
ITEM
2006-07
2005-06
1. Medium and long-term
2. Military
3. Commercial
4. IDB
Total public and publicly guaranteed
5. Private un-guaranteed debt
6. IMF charges
7. Other Interest
Total Interest
666
618
8
8
11
8
XX
10
14
695
648
154
85
23
16
364
264
1,236
1,013
Reserves
In context of an overall surplus of $ 3,730 million, reserves position showed a net increase of $ 3,830
million with net receipts of $ 100 million under the exceptional financing during the year. Reserves
held by the Central Bank i.e. State Bank of Pakistan (including SDR) and Deposit Money Banks
increased to $ 3,537 million and $ 173 million respectively during the year. The repurchases /
repayments of $ 120 million (SDR 81 million) were made to IMF during the year as against $ 143
million (SDR 98 million) in last year.
The quarter-wise and annual position of reserves is as under: ITEM
Reserves (1 plus 2)
1. Central bank (net)
1.1 Reserves
1.2 Reserves position in the Fund
1.3 Use of Fund credit & loans from the Fund
i) Purchases/ drawings
a) PRGF
b) Extended fund facility
ii) Repurchases/Repayments
a) Stand – by arrangement
b) Extended fund facility
c) PRGF
2. Deposit Money Banks
2.1 Reserves (Balance with authorized
Dealers)
2006-07 (Quarterly)
Jul – Sep Oct – Dec Jan – Mar Apr – Jun
(Million US $)
Annual
2006-07 2005-06
670
-695
-502
-3,303
-3,830
-1,279
570
-531
-681
-3,015
-3,657
-922
580
-488
-671
-2,958
-3,537
-779
0
0
0
0
0
0
-10
-43
-10
-57
-120
-143
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-10
-43
-10
-57
-120
-143
0
0
0
0
0
-39
-5
-9
-5
-9
-28
-27
-5
-34
-5
-48
-92
-77
100
-164
179
-288
-173
-357
100
-164
179
-288
-173
-357
XXI